Item 5. Market for Registrant’s Common Equity
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Market Information for Common Stock
The Company's Class A Common Stock began trading on the Nasdaq stock market under the symbol “WMG” on June 3, 2020. The Company's Class B Common Stock is not listed on any stock exchange nor traded on any public market.
Holders of Record
As of November 19, 2020, there were approximately 10 stockholders of record of the Company's Class A Common Stock. Because many of our shares of Class A Common Stock are held by brokers and other institutions on behalf of individuals and entities, we excluded the total number of beneficial owners represented by these record holders. As of November 19, 2020, there were 10 stockholders of record of our Class B Common Stock.
Dividend Policy
The Company’s ability to pay dividends may be restricted by covenants in certain of the indentures governing its notes and in the credit agreements for the Senior Term Loan Facility and the Revolving Credit Facility.
In the first quarter of fiscal year 2019, the Company instituted a regular quarterly dividend policy whereby it intended to pay a modest regular quarterly dividend in each of the first three fiscal quarters and a variable dividend for the fourth fiscal quarter in an amount commensurate with cash expected to be generated from operations in such fiscal year, in each case, after taking into account other potential uses for cash, including acquisitions, investment in our business and repayment of indebtedness. In connection with the IPO, the Company amended its dividend policy whereby it intends to pay quarterly cash dividends to holders of its Class A Common Stock and Class B Common Stock. The Company paid the first dividend under this policy of $0.12 per share in September 2020. The declaration of each dividend will continue to be at the discretion of the Company’s board of directors and will depend on the Company’s financial condition, earnings, liquidity and capital requirements, level of indebtedness, contractual restrictions with respect to payment of dividends, restrictions imposed by Delaware law, general business conditions and any other factors that the Company’s board of directors deems relevant in making such a determination. Therefore, there can be no assurance that the Company will pay any dividends to holders of the Company’s common stock, or as to the amount of any such dividends.
Stock Performance Graph
This performance graph shall not be deemed to be "filed" with the SEC for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by reference into any filing of the Company under the Securities Act or the Exchange Act.
The following graph shows a comparison of the cumulative total return on our Class A Common Stock from June 3, 2020 (the date our Class A Common Stock commenced trading on the Nasdaq Global Select Market) through September 30, 2020 with the cumulative total return of the Standard & Poor's 500 Index (“S&P 500 Index”) and the Nasdaq Composite Index over the same period, assuming the investment of $100 in our Class A Common Stock and in each index on June 3, 2020 and the reinvestment of dividends in each of our Class A Common Stock and each index. The graph uses the closing market price on June 3, 2020 of $30.12 per share as the initial value of our common stock, which had an initial public offering price of $25.00. The monthly intervals below are based on the Company’s 52-53 week fiscal year in which each reporting period ends on the last Friday of the respective period.
The comparisons in the graph below are based on historical data and are not indicative of, nor intended to forecast, future performance of our Class A Common Stock.
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6/3/2020 6/26/2020 7/31/2020 8/28/2020 9/25/2020
Warner Music Group Corp. $ 100 $ 101 $ 100 $ 98 $ 90
S&P 500 Index 100 96 105 112 106
NASDAQ Composite Index 100 101 112 124 115
Securities Authorized for Issuance Under Equity Compensation Plans
See Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
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ITEM 6. SELECTED FINANCIAL DATA
The following selected financial data should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and related notes thereto included elsewhere in this Annual Report.
The following selected financial data have been derived from the Company’s consolidated financial statements. The financial data for the fiscal years ended September 30, 2020, September 30, 2019 and September 30, 2018, and as of September 30, 2020 and September 30, 2019 have been derived from the Company’s consolidated financial statements included elsewhere in this Annual Report. The financial data for the fiscal years ended September 30, 2017 and September 30, 2016, and as of September 30, 2018, September 30, 2017 and September 30, 2016 have been derived from the Company’s consolidated financial statements not included in this Annual Report. Historical results are not indicative of future operating results.
Fiscal Year Ended September 30,
2020 2019 2018 2017 2016
(in millions, except per share data)
Consolidated Statements of Operations Data:
Revenues $ 4,463 $ 4,475 $ 4,005 $ 3,576 $ 3,246
Interest expense, net (127) (142) (138) (149) (173)
Net (loss) income (470) 258 312 149 30
Less: Income attributable to noncontrolling interest (5) (2) (5) (6) (5)
Net (loss) income attributable to Warner Music Group Corp. (1) (475) 256 307 143 25
Net (loss) income per share attributable to common stockholders:
Class A – Basic and Diluted $ (0.82) $ — $ — $ — $ —
Class B – Basic and Diluted (0.95) 0.51 0.61 0.29 0.05
Cash dividends declared per common share:
Class A Common Stock $ 0.12 $ — $ — $ — $ —
Class B Common Stock 0.27 0.59 1.84 0.17 —
Consolidated Balance Sheet Data (at period end):
Cash and equivalents $ 553 $ 619 $ 514 $ 647 $ 359
Total assets 6,410 6,017 5,344 5,718 5,335
Total debt (including current portion of long-term debt) 3,104 2,974 2,819 2,811 2,778
Total (deficit) equity (45) (269) (320) 308 210
Consolidated Statements of Cash Flows Data:
Cash flows provided by (used in):
Operating activities $ 463 $ 400 $ 425 $ 535 $ 342
Investing activities (219) (376) 405 (126) (8)
Financing activities (316) 88 (955) (128) (216)
Depreciation and amortization 261 269 261 251 293
Capital expenditures (85) (104) (74) (44) (42)
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(1) Net loss attributable to Warner Music Group Corp. for the fiscal year ended September 30, 2020 includes a net loss on extinguishment of debt of $34 million, non-cash stock-based compensation expense of $608 million, and a one-time management agreement termination fee and IPO-related expenses of $89 million. Net income attributable to Warner Music Group Corp. for the fiscal year ended September 30, 2019 includes a net loss on extinguishment of debt of $7 million, variable compensation costs associated with the Senior Management Free Cash Flow Plan of $71 million and a benefit due to the reversal of the U.S. valuation allowance of $59 million related to foreign tax credits. Net income attributable to Warner Music Group Corp. for the fiscal year ended September 30, 2018 includes a net loss on extinguishment of debt of $31 million, variable compensation costs associated with the Senior Management Free Cash Flow Plan of $108 million, net gain on the Spotify share sale of $317 million after taxes and restructuring charges of $44 million. Net income attributable to Warner Music Group Corp. for the fiscal year ended September 30, 2017 includes a benefit due to the reversal of the U.S. valuation allowance of $125 million, net loss on extinguishment of debt of $35 million, variable compensation costs associated with the Senior Management Free Cash Flow Plan of $102 million and net gain on divestitures primarily related to
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PLG of $6 million. Net income attributable to Warner Music Group Corp. for the fiscal year ended September 30, 2016 includes net loss on extinguishment of debt of $18 million, gain on sale of real estate of $24 million and net gain on divestitures primarily related to PLG of $9 million.
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